We by no means feel that everything in the list is a good investment, but we do feel that our list a good place to start your own research. Usually.

Last weekend, we received a request from a shareholder to add Power-Save Energy Corp (PWSV.ob) to our list. It fell to me to check it out, and while I did check that they provide enough information to make an informed investment decision (they file audited financial statements with the SEC,) the contents of those statements would have made me flinch, at least if I had bothered to read them.

Non-Existent Internal Controls

Fortunately for us, we have many diligent readers, and one of them quickly pointed out that PWSV did not belong on our list. Here are a few things I should have read the first time around:

From the auditor’s opinion (italics mine):

The Company is not required to have, nor were we engaged to perform an audit of the Company’s internal control over its financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Since the auditors don’t have an opinion on internal controls (this is not particularly unusual for an over the counter or pink sheet company), I should have looked to see what I thought of any controls they might have. I would have found:

Not only is the CEO Michael Forster also the Chairman of the Board, he is the Chief Financial Officer as well. Given no separation of duties, it is impossible for the company to have any sort of financial controls.

The Board consists of Mr. Forster, a 38 year old relative of Mr. Forster, and a 23 year old whose most relevant experience was managing daily operations at a restaurant.

Under the internal review of controls and procedures, "The Certifying Officers [who, you will note above, are actually one person, Mr. Forster] have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report and believe that our disclosure controls and procedures are effective based on the required evaluation." At the very least a lack of separation of duties should have been highlighted as a material weakness in this section.

Why Internal Controls Matter

None of this is to say that Power-Save might not be a viable business. It may or may not be. I’d have to do more research to find out. But there is no reason to do more research, because even if the company had discovered a process for turning lead into gold, there is no reason to believe that shareholders would ever see any of the profits. Mr. Forster does not even need to write out a company check to himself, he can simply grant himself excessive compensation in the form of cash and stock so that all company profits flow directly into his pay packet.

Off the List

The shareholder who contacted me with the stock is probably going to be unhappy that I not only removed PWSV from our list, but wrote this article suggesting it is a bad investment. I’m doing this in order to reduce my workload: if you would like to add a stock to our list, please do some preliminary checks of your own before bringing it to our attention. You’ll save yourself money, and save us time, so we can continue bringing you information about stocks that really are worth investing in.

DISCLOSURE: None.

DISCLAIMER: The information and trades provided here and in the comments are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

6 COMMENTS

CBS News Test Reveals Significant Savings on Electric!
CBS 46 Investigates: Power Saver?
ATLANTA — A CBS 46 Investigation uncovered what appears to be a needless waste of power in some metro Atlanta homes.
A device called the “Power-Save 1200” promises to cut electric bills up to 25 percent. The U.S. Department of Energy has endorsed the technology, but not a single power company in the Southeast is willing to talk about the product.
Please watch the Videohttp://www.power-save1200.com/cbs46
I have a Power-Save 1200 and I am quite happy with my 11% per month saving

Note to readers: “Growingmoneywithgreentech” is the shareholder who initially contacted me to get the company listed.
He seems to believe that the technology is great, but, as I said above, without internal controls, it does not matter how great the technology is.
The claim that the US Department of Energy has “endorsed” the technology is suspect… the closest they come to endorsing anything is the Energy-Star program, and the device is not EnergyStar, as far as I can tell. If anyone has a direct reference to such an endorsement from some source other than Power-Save, please post it in a comment. Let me know if it is EnergyStar, as well.

By the way, I found a good explanation of how the device works: It corrects an error in how your meter reads your power usage, so it probably will reduce your electricity bill. However, no electricity is saved in the process (a little would have to be used by the device itself,) so while it may save you a small amount on your bill (how much I don’t know), it is not an energy efficiency measure. This device is definitely not green in the environmental sense.
Just one more reason it’s not on our list.

Power-Save tell us 25% and that’s allot to me.
with a Garnette that speak volumes.
As you stated your guessing
you have no facts.
CBS 46 did there home work
As you stated in your first
Statement you failed to do your DD now you have Egg on your face.
You bring a bad name to all PHD’s and Alt Energy.
Power-Save has
no debt
Rev increasing 100% per yr
Income Increasing 100% per yr.
Solar works
wind works
power-Save 1200 Works
and Direct marketing works
Keep back peddling

Tom
Have you validated the technologies of all the companies listed on your website ?
I think not
The power-save 1200
uses 1/10 of an amp in electricity equaling about 10 cents per month that’s right 10 cents
Last month alone I save $30.00
The power-Save 1200 works